3.0 OBTAINING AND PRESENTING THE PURCHASE AGREEMENT
3.1 DISCLOSURE OF SELLERS AGENCY RELATIONSHIP
3.2 THE PURCHASE AGREEMENT
a) The purchase agreement is the contract that sets forth the intent of both the buyers and sellers. It establishes the basis upon which the listing and sales agent, mortgage companies and attorneys process the sale.
b) All purchase agreement addendums must be signed by all parties and must be attached to the original purchase agreement.
c) The lack of a complete understanding of all terms of the purchase agreement creates many of our later problems. Make certain all parties to agreement review the entire contract and make every effort to see that they understand the offer.
d) Personal property inclusions and exclusions create problems also. Be exact and complete. The purchase agreement supersedes the listing agreement and the seller’s statement of condition. If any fixture is not included specify that exclusion on the purchase agreement. Remember, all personal property included in the sale must be clearly defined in the purchase agreement or separate personal property bill of sale.
3.3 EARNEST MONEY
a) The purpose of the earnest money deposit is to commit the buyer to the purchase. The more earnest money deposit, the stronger the buyer’s commitment to complete the transaction. The company recommends a minimum of $500 earnest money but lesser amounts may be taken if buyer doesn’t have $ 500.
b) Have earnest money deposit checks payable to McCraw Real Estate.
c) If the amount of earnest money deposit exceeds the down payment the excess will be returned to the buyer or applied to the closing.
d) Delivery to Managing Broker of earnest money deposit checks is to be done no later than the next business day after acceptance of the offer.
e) If in the event an earnest money deposit check is returned non-sufficient funds of other cause, the agent must notify the seller and brokers on both sides of the transaction immediately in writing of the returned check.
f) Earnest money deposits can be disbursed from the Escrow account only at the closing of the sale, or a cancellation of agreement signed by the buyer and seller and all involved brokers, or by court order.
g) Earnest money deposit on a sale with a first right of refusal contingency must be deposited immediately after the purchase agreement is signed by all parties. You cannot wait until the contingency is removed.
h) Postdated checks and promissory notes will not be accepted.
3.4 REAL ESTATE TAXES
a) It is recommended that the Sales Associate explain to the buyers about the proration of taxes that will take place at Settlement.
b) Property valuations may change when a property is sold. DO NOT MAKE REPRESENTATIONS AS TO FUTURE TAXES OR SPECIAL ASSESSMENTS. It is impossible to guess the future actions of the taxing authority.
c) On property that is under LAND USE, the tax liability that is due in the case of a change in the Land Use after settlement, must be explained to both buyer and seller at the signing of the contract. Be especially careful if large tracts of land or a farm is being sold as these properties are sometimes placed under LAND USE for reduced taxes. Always ask owner if property is under LAND USE. Then go and double check it for LAND USE with the proper authority, to make certain.
3.5 BUYERS SIGNATURES
a) There may be an occasion when you are able to receive only the signature of one buyer. In this event, the contract should include the available buyers name and “or assignees.” This eliminates the need to get additional signatures.
b) All changes and corrections must be initialed by all parties signing the purchase agreement. Never sign or initial on behalf of the buyer or seller, even when you have been instructed to by either party.
c) Fax signatures may be sought; However documents with original signatures are to be obtained as soon as possible.
3.6 APPOINTMENT TO PRESENT THE PURCHASE AGREEMENT I
a) Offer on MLS Listing
- All offers should be typed or printed legibly and earnest money deposit to be made payable to McCraw Real Estate. A copy of the earnest money check will be made and retained for office files.
- The listing agent/broker should be contacted immediately for presentation to the seller. You may request to be present when the offer is presented.
- In the event that you cannot contact the listing agent or their representative within the time frame of the purchase agreement, clear all personal presentations to the seller through your broker and subsequently through the listing broker.
b) Offer on Company Listing
- All offers should be typed or printed legibly and earnest money to be made payable to the McCraw Real Estate Escrow Account.
- The listing agent should be contacted immediately for presentation to the seller. You may request to be present when the offer is presented.
- In the event that you cannot contact the listing agent within the time frame of the purchase agreement, clear all personal presentations to the seller through your Broker.
c) Interest Bearing Trust Accounts
1. McCraw Real Estate Escrow Account is not an interest bearing account. Buyers shall be notified of this when collecting deposits.
3.7 WHAT OFFERS ARE TO BE PRESENTED
a) Rules and Regulations require all written and oral offers on a property to be presented immediately. It is suggested that the purchase agreement be accompanied by a copy of the earnest money deposit check.
b) Purchase agreements will not be valid until all parties have signed and initialed any changes on the purchase agreement and addendums.
c) In the event there are offers from more than one buyer, all of the offers deserve equal consideration regardless of the sequence in which they were written. All offers should be presented at the same time if possible.
d) In the event there is an outstanding counter-offer on a home, a new offer must be presented if received prior to the acceptance of the counter-offer by the first buyer. The acceptance of the new offer should be contingent upon the cancellation of the existing counter-offer.
3.8 PRESENTING THE OFFER
a) The listing associate has the right to present the offer. The selling associate may request to be present when the offer is presented and may be permitted to present the offer in listing agent’s presence. Selling associate should not be present during negotiations between listing associate and seller, concerning offer.
b) As listing agent, your primary legal responsibility is to represent the seller. Be certain to meet that responsibility. Don’t let those few “little details” slide. They may create legal and financial problems for you and our seller later.
c) It is suggested that a “Seller’s Estimate Closing Statement” be prepared and presented to the seller. A copy of a signed “Sellers Estimate Proceeds” should be placed in the company file in case another associate is covering your closing. Be certain the facts are correct to the best of your ability.
3.9 ACCEPTANCE OF COUNTER-OFFER
a) An offer may be accepted, rejected of countered by the seller.
- If the offer is accepted without change, have the seller sign it. The original purchase agreement, addendums, and the earnest money deposit is held by the selling firm. The seller receives a copy. The selling agent delivers a copy to the buyer and keeps a copy. If a co-op sale, the co-op broker receives a copy.
- If the offer is changed it becomes a counter-offer. In the case of a counter-offer the seller should sign the agreement and the counter-offer. The counter-offer is only a sale when it is signed by the buyer and delivered to the seller or their agent. Copies should be distributed as in 1 above.
- Never take the verbal assurance of another agent that something “will be O.K. with the buyer. Don’t bother to change the agreement.” Get the change made on the purchase agreement counter-offer form with signatures, initials, dates, and times; if you do not, you may be legally and financially responsible.
- When an offer is rejected, any earnest money deposit checks are to be returned to the agent of buyer. and copies will be filed in the office.
b) Never sign or initial papers on the behalf of the buyer and seller, even when you have been so instructed to by either party. Never make any changes after the purchase agreements have been signed by the buyers and the sellers, except with specific instructions to make changes by buyers and sellers and have buyers or sellers initial the changes made. These changes should be dated if different than the offer acceptance date.
3.10 CANCELLATION OF A PURCHASE AGREEMENT
a) A written offer, including the clause “null and void and the earnest money deposit is to be returned to the buyer,” may not legally cancel a purchase agreement. A purchase agreement will be legally canceled by a written agreement to cancel between the buyer and seller or by a court order. Associates are required to have a cancellation agreement signed in the event of an agreement being declared “null and void.”
b) A Mutual Release is to be used when an agreement is canceled. When it is completed turn it in to the Brokers and they will disburse the earnest money deposit according to the agreed terms of the cancellation agreement. This form is to be signed by the buyer, seller, and by each involved Broker.
c) Always discuss any pending cancellations with your broker.
d) Earnest money will not be refunded or disbursed until it has been verified that the earnest money check has cleared the buyer’s bank. This may take ten or more business days. Upon verification of check clearing the buyer’s bank, the earnest money will be disbursed as the cancellation documents instruct the distribution.